The Verdict: free agent auction bidding works best

One of the most important aspects of playing fantasy baseball is a team owner’s ability and skill at making transactions and adding free agents before and during the season. In most cases, the team you draft is not the team with which you will ultimately end up. Undoubtedly, regardless of how many teams are in your league or how many roster spots are required, there will always be players that go undrafted and emerge as viable fantasy options later on. The key to success in a fantasy baseball league is the ability of teams to make those moves at the right time. But the analysis of whether a transaction is good or not will be left for another day. Instead, this edition of “The Verdict” takes a deeper look into the various procedures for how transactions are processed.

For some background, I have been the commissioner of an 18-team, head-to-head, points league since 1999. For the first 10 years of the league, team owners would submit their add/drops to me and I would process them. All transactions had to be submitted to me by a certain time, and then I would manually go through the lists and figure out who got who. In the event two teams claimed the same player, the team with a worse win-loss record or on the short end of a tiebreaker would have the rights to that free agent. Upon moving my league to CBS in 2008, the free agent process was handled automatically with a waiver priority order based on overall record. Generally speaking, the process of handling transactions this way worked.

The reason for handling transactions in this manner was obvious: to help the less successful teams get better and make the league more competitive since they had a better chance of obtaining the best free agents. However, this also had the detrimental effect of penalizing the more successful teams and preventing them from bettering their team as well.

In 2010, I decided to even the playing field and change the way transactions were handled by implementing a free agent auction bidding process (“FAAB”). I assigned an arbitrary budget for everyone ($250) where each team could bid on available free agents. The team that bid the most money on a player was awarded him, regardless of where that team stood in the standings. This afforded the best teams and the worst teams the same opportunity to make improvements while not handicapping or penalizing anyone else. It also required people to make strategic decisions on how they wanted to spend their fake money. Despite being met with some skepticism and trepidation, my league members enjoyed this new process and have embraced it.

As the commissioner of the league, FAAB made my life infinitely easier since I no longer had to manually handle any aspect of doing add/drops. The bidding process is completely blind, so no one will know what you have bid on a player. This means, in theory, that you could spend $25 on a free agent when no one else even bid $2 on that same player. But that is the nature of the process, and I personally approve of the fact that the process is entirely blind. It really adds another element of strategy and competition when pondering what the appropriate value of a free agent is in the context of your league and fellow league members. Since the bidding process is completely blind, I didn’t have to worry about any improprieties when I made my own transactions. As a word of advice for you fellow commissioners: anything you can do to remove ANY semblance of impropriety is beneficial. This means relinquishing control over certain things that can be handled automatically.

Another positive aspect of FAAB is the fact that it does provide checks and balances to prevent teams from dominating the entire process. Once a team wins a bid on a free agent, that team is then moved to the bottom of the waiver order. This means that they would essentially lose a tiebreaker to another team bidding the same amount on another free agent. Of course, if a team chooses to bid enormously high on multiple free agents in the same week, then they would win all of those players. But that is a conscious choice by a team to spend their money in such a way.

No matter what format or style your league uses, transactions are going to be an important factor. How you choose to handle transactions is also one of the most critical decisions a commissioner can make because it has a significant effect on all league members and the way they play the game. The verdict is that implementing an auction process to bid on free agents is the fairest, most efficient, and most thought-provoking manner in which to handle transactions. If your league has never tried it before, it is something you should seriously consider.

Comments

I’d imagine you could solve the FAAB bankruptcy issue if the price paid for a winning a bid were similar to eBay in the sense that the winner only pays a minimum increment over the next highest bidder. For instance if manager A bids $10 and manager B bids $3 for a player, then manager A only has to pay $4 to be awarded that player. All other aspects of the bidding process would remain intact.

I’ve never actually participated in a FAAB league, so I don’t know how this would work out in actuality or if it has already been implemented in some leagues.

My keeper league uses the blind bid as described in the article although I would prefer a blind eBay approach as I tend to overpay. Our players have a contract code depending on when and how he was acquired. Depending on the contract code, a penalty transaction fee is imposed when players are dropped. Except for a player obtained in this year’s auction, there is a 50% fee for dropping a player. Thus dropping a $20 keeper player or free agent would result in a $10 penalty fee and a $2 transaction fee of real money. I ended up spending over $100 in fees last year but I have keepers such as Dan Hudson and Mike Minor for $3 this year. Many owners rarely use their FAAB and I can usually trade an excess player for FAAB.

tjg, how about a vickrey auction for faab. my league has first-come first-serve for normal free agents, but since it’s a deep nl-only league, the majority of free agent pickups are not that important. however, we do use a vickrey faab auction for american leaguers traded to the nl and non-drafted minor league callups. I think a vickrey auction works well and while it may not completely solve your problem, i think it will help.

The problems described are understandable, but unfortunately there doesn’t appear to be a way on CBS to have bids go the way eBay does (i.e., the winner only has to spend $1 more than the next highest bid). If someone out there knows if this can be done, please let me know. But after reviewing the settings again, I do not see that option.

The way that I deal with this issue is by allowing $0 bids. I know this may not be ideal, but it does allow teams merely the ability to fill out their roster in the event they spend all of their money early on and then have to fill spots for injured players. While spending all of their free agent money early is unintelligent, it is not against the rules and these people should mot be penalized later on by having illegal rosters or the inability to compete. So having $0 bids will likely preclude them from getting any worthwhile free agents, but it will at least allow them to make moves.

We’ve had the FAAB for a couple of years. As the commissioner of the leaque, I wouldn’t allow it. Bad experience several years ago when a league I was in started to allow trading players for draft picks. One owner in particular wound up with several first, second, and third round picks and had an all star team before anyone else had opened their second beer. Other owners abused this as well. I’m afraid trading players for FAAB dollars would result in similar results. You would have two or three owners with $400-$500 FAAB dollars and a roster full of prospects,and you would have two or three owners with all star teams. Not in the spirit of the game. I also believe once you start going down this path, you start to diminish the importance and value of the draft. If an owner knows he can more or less “buy” three or four quality players, to me it really cheapens Draft Day.

I don’t think trading FAAB dollars is a good idea at all. Similar to what TJG said, this can lead to an imbalance in the league before the draft even takes place. Plus, when it comes to evaluating or approving the trade from the Commissioner or a league vote, it becomes very arbitrary in determining equivalent value and the fairness of the deal. The concept sounds interesting, but the issues that would stem from it far outweigh any benefit obtained. As Notorious B.I.G. said, “mo’ money, mo’ problems.” Yes, I just quoted Biggie in a fantasy baseball conversation. That just happened.

Our 12 team, NL only league moved to the FAAB system two years ago and it has worked very well -with some notable exceptions. Some owners can’t help themselves and continually overbid on free agents early in the season and therefore exhaust their FAAB budgets by mid-July or early August. The result is these owners have zero FAAB dollars to replace players on their active rosters who are injured, released, sent to the minor leagues, etc. And what is left from about Auust 1 on is a shell of team, littered with players who aren’t playing, and non-competitive. And of course this leads to a loss of interest which only benefits the handful of teams competing for the league championship. While I’m as big a free market and personal responsibility person as anyone, this unbridled spending by some owners early in the season has led to a bright line between a few teams who regularly compete for the league championship and a few teams who more or less throw in the towel by the All Star break. After doing quite a bit of online research on the FAAB, I found that some leagues actually put a limit on how much an individual team can bid on one player. In the event two or more teams enter the same bid, the free agent is awarded to the team lowest in the standings, based on the previous week’s standings. Another very good idea was to require that all teams have a minimum FAAB balance on September 1, thus insuring that all teams have enough FAAB money during the last month of the season to replace players on their active rosters if they are injured, released, etc. I thought these two ideas, combined, would solve our league’s problems. When I presented the two ideas to the league owners for consideraton, both were overwhelmingly defeated. The general consensus was if owners wanted to spend their FAAB money early and often and be regulated to second division status the last three months of the season, so be it. So I guess we’ll see more of the same in 2011.

Anyone out there have any better ideas on how to solve this FAAB problem and sell it to your league in such a way that “Free Enterprise” isn’t an issue?

Good job, Michael. I believe I quoted Raekwon in one of my first columns here.

Yeah – I get what you and TJG are saying, and I’m kind of on your side pragmatically. But, that puts me in conflict philosophically. …It just seems like that you are giving people FAAB dollars, those are basically assets, and players should be allowed to use them in the marketplace as such, which would include bartering with them.

On the other hand, in most professional sports leagues, there are (to my knowledge) limits as to how much cash can be included in trades. …Yet, I’d also argue that FAAB dollars aren’t exactly cash, and that a compelling argument can be made that they even more analogous to draft picks, which can be freely exchanged.

I understand the problem that TJG iterates, but it seems like just banning a behavior is a blunt way of addressing it. I mean this as no insult to you, TJG, but as an observation from years of reading comments here – I think a lot of people (perhaps some of TJG’s leaguemates among them) play in leagues that are too advanced for their skill levels. I’m more likely to take the position that if those in your league can’t responsibly manage FAAB budgets and the exchange of those commodities, then perhaps the problem doesn’t like in the trading of FAAB dollars, but in those who are doing the trading. The real problem is that people don’t seem able to properly value their commodities, or understand the implications of creating a terrible imbalance of FAAB dollars. In a perfect world, you wouldn’t need to restrict the trading, you’d just have a more efficient marketplace. The more complex a system, the more ways there are for the better players to exploit the weaker players and this is a dynamic that I see in a lot of the issues that come up that cause commishes to have to make rules that basically ban behaviors in order to protect less wise owners from themselves.

…A quick anecdote. Going in to this season in my core league (which is a very simple set up), one of the traditionally successful owners is in a bad situation with his keepers. I have an excess of keep-able players. I’ve been weighing the options of a trade with him. Any trade that would be made would most likely marginally improve my team, while significantly improving his. …Many people lack the big picture strategy, which leads to situations like one person getting 6 picks in the first three rounds. I decided that unless I got the deal I really wanted, I wouldn’t trade with him. I’d rather he start the draft further behind the 8-ball. Making my team 2% better at the cost of making his team 10% better (totally arbitrary numbers) wasn’t worth it to me. Now, there are other owners in the league that I’m just confident I’ll outdraft, outwit, and just outplay every year. I would have made a trade like that with those guys, but I’m not going to help close the gap between my team and one of my most worthy adversaries’.

At the same time, there are other owners who have done similar things toward me. They said, Derek is one of the best in this league and his keeper core is already among the strongest, I’m not going to play a part in his team getting even stronger – I’m going to force him to dump his excess assets back into the pool even though allowing him to consolidate them in a two-for-one deal with me might be good for my team.

The point here is that people have to understand how their moves affect the competitive dynamic of the league as a whole, and if they don’t, perhaps they’re not ready for the more complex instruments they have at their disposal.

FAAB is vastly superior to any other system for acquiring free agents. I am pretty dogmatic about the following:
1. Minimum bid should be $0. If you’ve spent all your FAAB, you still can acquire players. In fact, you can still acquire useful players if everything breaks right. Some weeks, players with upside are in the FA pool, but everybody else has a healthy mediocrity at that position and is too risk averse to take the plunge. Last year, Logan Morrison went for $0. He was better than at least 20 OF in the league the rest of the way.
2. The high bidder should pay what he bid, not what the runner-up bid + $1.
3. FAAB should be freely tradeable.
4. FAAB cannot be rolled over as auction money the next year.

We don’t use keepers in my league, so I don’t have any feel for what works in setting keeper salaries for FAAB pick ups. FAAB bids are not an especially useful keeper salary, because FAAB values have no resemblance to auction values. In most leagues $40 will buy you a top 5 superstar at auction. In the season, the talent pool is far thinner. If a superstar gets traded into the league, most owners will bid their entire remaining FAAB budget. When Dan Haren was traded into my leage last year, he went for more than $200 FAAB.

Nope, not confusing FAAB dollars with auction dollars. We do a straight draft, not an auction. As I stated earlier, I believe an owner with deep pockets (i.e. $200-$300 extra FAAB dollars) can go into a draft knowing that he can come up short in certain categories and make up the difference two or three months later by buying what he needs. I think this process, and it does happen, can cheapen the importance of Draft Day. We use the FAAB to bid on anyone in the free agent pool, players coming up from the minor leagues, and players coming over from the American League. Many times, bidding on these players (Holliday, Strasburg, Posey, Stanton, etc.) goes for far more than $1, In our 12-team, 5×5 league, rarely can you get a player you want for $1. More often you get a player no one else wants.

Perhaps it is a matter of setting the proper level of FAAB dollars. Ours is $100 with a minimum bid of $3. There are no $0 bids; no more FAs for the season once your FAAB is below $3. However we make a distinction on waiver claims. If a team drops a player, then any team (in reverse standing priority) can claim that player the following week without paying FAAB.

Maybe I’m wrong, but it seems like TJG is confusing FAAB dollars with auction dollars. FAAB dollars have absolutely nothing to do with the draft. We’re only talking about picking up waiver wire guys here so unless a top notch player suddenly becomes available (rare unless some idiot decides to drop an all-star player) most of the guys you’ll want can be had for $1. Most teams in my league never come close to spending all of their money and in the rare case where someone does, we’ve never had a problem with someone trading an extra player for a few extra FAAB dollars.

Love FAAB, but wish the sites supported making it open bidding (just like on auction day) as opposed to blind bidding. We have been looking for this for years and even tried to use ebay for it last year. Anyone have any tips?